Heinz 3Q Profits Up, Buys Stake in Brazilian Co.

March 3, 2011

H.J. Heinz Co. announced a major step in its push into emerging markets -- the purchase of an 80 percent stake in a Brazilian food company, reports the Associated Press. The news came as Heinz reported that its revenue from the U.S. and emerging markets, along with recent price increases, helped drive its third-quarter net income up 20 percent. Heinz, the world''s largest ketchup maker, has relied recently on emerging markets like China, India and Russia to fuel its growth. It said its plan to acquire the stake in S.A. Industrias Alimenticias, the Brazilian maker of Quero brand tomato sauce and ketchup, eventually will double its sales in Latin America. Terms of the deal, which will also give Heinz a factory and distribution service that could be critical to its future in the fast-growing region, were not disclosed. Revenue rose nearly 2 percent to $2.72 billion, matching estimates. The company benefited from recent price increases it put in place to cope with higher input costs. Its sales rose in most markets around the globe outside Europe. As evidence that its emerging-markets strategy may be working, revenue in those regions jumped 15 percent. Global volume edged up 0.5 percent, helped by acquiring Foodstar in China in November. Food and consumer product makers are putting a heavy emphasis on opportunities in countries where the middle class is expanding rapidly and consumers'' appetite for western goods is growing. This helps many companies offset softer sales in mature markets like the U.S. and Europe, where consumers have slowed their spending in the weak economy.